The Hon. Sunil Handunnetti

¶ 01 We do not assume that every risk we fear will materialize and spend all allocations as if they certainly will. Those who understand public financial management know that the Vote on Account is used because the Appropriation Act for the year is not yet passed, and risks may arise in the interim. For example, we have provisioned funds for ISB-related commitments based on 2024 agreements to a prudent estimate. If, by 31 December 2024, we can reach finality, the Rs. 3,000 billion set aside in this Vote on Account will not be required, and those funds will remain unspent.

¶ 02 You also said that large sums are allocated under the President’s expenditure head. But if, within the 2024 Budget allocations, we reduce commitment fees and manage to settle and rescue those exposures, we can save significant amounts across ministries and institutions, thereby retaining funds for the Treasury. Accordingly, the Cabinet decided that, by end-December, unutilized funds should be returned to the Treasury rather than transferred to other heads or used for nonessential expenses such as commitment fees. All Ministers and State Ministers know this decision. We believe savings can be achieved by cutting wasteful spending, such as excessive backup vehicles and security entourages. The President has already set an example.

¶ 03 Therefore, the full quantum set aside in the Vote on Account need not be spent. That is the reality.

¶ 04 Hon. Kabir Hashim, as someone who has served as a subject Minister, you know this truth well. In the first eight months of 2024, we spent Rs. 562 billion out of Rs. 1,055 billion allocated for education, health, and nutrition. Essential services must be maintained: Rs. 112 billion for “Aswesuma” assistance; Rs. 9.5 billion for school supplies; Rs. 4.4 billion for textbooks. We also received assistance from the Chinese Government for school uniforms, allowing savings on that allocation—an unexpected aid that frees resources. We believe substantial savings can be realized.

¶ 05 From the very inauguration, the President set an example. Despite attempts to create a public perception that a large amount was set aside for Mr. Ranil Wickremesinghe’s inauguration, that money remains in the Treasury. If either Mr. Wickremesinghe or Mr. Sajith Premadasa had taken oaths as President, the situation would not be what it is today. Consider how much was spent previously on Ministers’ assumption of duties—celebrations, banners across towns at public expense. We have none of that. Our Cabinet members did not occupy ministerial residences; only two of our group of 24 MPs moved into MPs’ official quarters at Madiwela. Thus, those costs—utilities and other expenses—are saved. Many institutions under our Ministry also function in rented premises; those costs, too, are being scrutinized and reduced.

¶ 06 For example, the National Gem and Jewellery Authority under my Ministry pays Rs. 5 million per month in rent. The Ministry of Trade’s rent is Rs. 65.8 million per month. We have decided to shift such offices into government-owned buildings. Though the 2024 Budget provided funds to pay existing rents, we must honor legacy contractual obligations whether we like it or not. People speak of large fees to firms like Clifford Chance. We did not hire them; if we abruptly terminate them and bring another advisory firm for restructuring, they will sue, and the State will bear litigation costs. Hence, certain legal commitments must be honored, even if not our preference. It is disingenuous for those who engaged these advisors—Dr. Harsha, Hon. Kabir Hashim, Hon. Ravi Karunanayake and others—to now attack from the other side. That is political hypocrisy. The IMF’s legal counsel arrangements were not initiated by us, nor were the fee scales set by us.

¶ 07 The public—especially taxpayers, businesspeople, and industrialists—support our programme. In fact, about 80 percent of public servants endorsed our approach and voted accordingly. On the last tax due date, 30 September, there were queues of willing taxpayers; the online app of Inland Revenue was congested due to heavy use. Businesses even requested dedicated bank queues on September 15 and 30 to facilitate payments. This willingness exists because of the example set by the President and this Government.

¶ 08 Previously, reluctance to pay taxes arose from a lack of trust—uncertainty about how taxes were used. Now people see a fair policy and purpose. We will not spend all allocated sums; we will save wherever possible, and the public will support prudent restraint.

¶ 09 To further systematize the programme, President Anura Dissanayake has presented “Clean Sri Lanka” and the Digital Economy initiative. With process improvements, people can comply without queuing, saving time and fuel. We are moving away from rent-seeking, commissions, and corruption towards a rules-based, tech-enabled public and private sector.

¶ 10 On economic direction, the fundamental cause of collapse was the breakdown of the productive economy, creating a chronic trade deficit. We cannot simply ban essential imports due to an entrenched consumption pattern under an open economy: we need medicines, fertilizer, machinery. The issue is how much imported inputs we convert into higher-value domestic production. Our export base is weak. On a per-capita basis, Sri Lanka’s contribution to exports is about USD 680, compared to Singapore’s USD 133,722, Vietnam’s USD 3,776, and Thailand’s USD 4,752. We have not sufficiently added value to tea, spices, minerals, gems, nor effectively leveraged migrant labour.

¶ 11 Under our Ministry, we face stark examples. At Pulmoddai, about 180,000 metric tons of mineral sands (ilmenite) are stuck due to litigation by a business partner engaged under previous dealings; stay orders block sales. “Paranthan Chemicals” is hardly operating at Paranthan; the office is in Ratmalana and production in Horana—effectively “Ratmalana Chemicals.” We are working to restore genuine Paranthan operations. With Deputy Minister of Finance Harshana Suriyapperuma, we plan to bring transparent international tenders and structured programmes so we can produce fertilizer inputs domestically leveraging Eppawala phosphate and Paranthan, and add value to mineral sands.

¶ 12 Mr. Speaker: Hon. Minister, you have two more minutes.

¶ 13 I will conclude briefly. Under our Ministry and the Industrial Development Board, there are around 50 industrial zones. Historically, these were allocated haphazardly—given to political allies—mixing incompatible activities in single zones without environmental planning or access roads. In Mannar, one zone has only one investor despite Rs. 200 million spent on roads and infrastructure, but without a main access road due to litigation. Going forward, we will plan zones around identified industries and cluster needs, not ad hoc allocations.

¶ 14 Sugar mills once had capacity to serve not just Sri Lanka but the region. Now, stockpiled sugar sits in our own stores because buyers delay lifting. Cement too: Sri Lanka should have been an exporter—Kankesanthurai cement plant was built to support domestic and export capacity alongside a 32 MW power plant—but plans were made to sell such assets, often invoked under the IMF’s name. When we met IMF officials, including Peter Brewer, they told us they do not tell governments to sell; they advise improving revenue, while governments choose policy instruments. Successive governments misled the public that “there is no alternative to selling.” We reject that. The IMF has its frameworks, but our duty is to align external advice with national development.

¶ 15 We seek the people’s support to lead a revival that does not abandon the vulnerable. Thank you.

¶ 16 Document tabled.